What is expense reimbursement?

Expense reimbursement occurs when the company reimburses an employee for the amount he/she spent to perform a work-related activity. This can include transportation, food, travel, and even purchasing necessary materials. The important thing is to ensure the process is clear, fast, and error-free, so no one is left behind. Corporate reimbursement should be agile and part of a well-organized financial strategy, always considering your company's financial health.

What does the CLT (Consolidation of Labor Laws) say about expense reimbursement?

According to the CLT, expenses incurred by employees in the performance of their duties must be reimbursed by the company. Furthermore, these expenses should not be included in remuneration, meaning they should not generate labor charges. Refer to what Article 457 of the CLT states:

' Amounts, even if customary, paid as travel allowances, meal allowances, provided it is not paid in cash, travel per diems, bonuses, and grants are not part of the employee's remuneration, are not incorporated into the employment contract, and do not constitute the basis for any labor or social security charges.'

Therefore, it is clear: the company must reimburse the amount spent by the employee, as long as it is based on tax documents. It is important to comply with legal requirements and conduct the reimbursement process with transparency.

How does the expense reimbursement system work?

When an employee incurs a work-related expense, he/she must record it and submit invoices or receipts. From there, the manager or finance department approves the reimbursement, and payment is made. For the reimbursement process to work well, it is important to establish a workflow within the company. Here is how the reimbursement process works:

Time to request the reimbursement: The employee must fill out a form (either digital or physical) with information about the expense incurred and attach proof of payment.

Needs to be reviewed and approved: The manager or finance manager then reviews the documents, ensures the expenses are permitted by company policy, and approves or denies the reimbursement.

Time to refund: Once approved, the reimbursement must be paid within the stipulated time limit, using the company's usual methods, such as bank deposit or payroll inclusion.

What can be considered for corporate reimbursement?

Not all expenses are reimbursable. To avoid problems or misunderstandings, remember to have a well-defined policy regarding what can and cannot be considered for corporate reimbursement. Here are some examples of expenses that can be reimbursed:

- Airfare, taxis, public transportation, and car rentals;

- Hotels and accommodations during business trips;

- Meals during business trips or meetings;

- Purchases of materials necessary for the performance of professional activities;

Other work-related expenses, such as payments for training courses, conferences, or events.

How should I account for expense reimbursements?

Accounting for expense reimbursements is an important part of your company's financial management, as reimbursements are recorded as operating expenses when they are paid. Learn how you can easily account for reimbursements!

Record reimbursements in the correct account

These expenses are not considered direct costs, but they are necessary for the company's operations. They should be classified in expense accounts, such as “travel” or “food,” to keep everything organized.

Control Cash Flow

Whenever you make a refund payment, record this amount in your cash flow. This ensures your company’s finances remain organized and that you do not lose track of income and expenses. Maintaining this practice will help you have a clear view of your business's financial health.

Review Your Accounting Regularly

Perform periodic audits and review refunds to ensure all processes are being properly followed. With these practices, your company's accounting stays up-to-date and on track to avoid problems with the IRS.

How to create a policy for expense reimbursement processes?

With a well-designed policy, everyone involved feels safer, and the process becomes much faster and error-free. Learn how to put this into practice!

Leave no one in doubt: First of all, clearly and directly define what can be reimbursed, how payment will be made, and who has the authority to approve expenses.

Everything needs to have deadlines: the deadline for requesting reimbursement must be clear to everyone. For example, employees have up to 30 days after incurring the expense to request reimbursement, and so on.

Standardize documentation: define which documents are required for each step (invoice, receipt, travel ticket, etc.)

Train your team: The reimbursement policy should be communicated to all employees. It is always a good idea to provide training to ensure everyone understands how to follow the procedures correctly.

Having trouble? Learn how TOOLS can help

If the reimbursement process is complicated or time-consuming for your team, TOOLS, a spin off from Santander Group, is here to help.

Our BPO Financeiro solution can automate several manual financial processes, simplify expense management, and increase efficiency. This allows your team to focus on growing your business. With our Premises & Facilities services, we can also manage all the time-consuming operational aspects of your business, such as travel management, expense reimbursement, and building maintenance management. Please contact us and see how we can transform your processes for the future.

Our mission is to make everything faster, more digital, and more efficient, without complications.

Reach your full potential at TOOLS.

Email us to learn more: site@toolsds.com